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CHARLESTON -- With lawmakers concerned about future financial issues facing the West Virginia Public Employees Insurance Agency, a state Senate committee moved a bill to address those concerns.
The Senate Health and Human Resources Committee recommended for passage Thursday afternoon Senate Bill 268, relating to PEIA, after amending the bill and moving to send it to the Senate Finance Committee for further review.
"We're just trying to make sure that PEIA is there for many years into the future and that it is fiscally sustainable and that it is smoothed out to where future legislatures aren't having to fight with major budget impacts," said Senate Majority Leader Tom Takubo, R-Kanawha.
"We do have a subcommittee there that is especially set up in anticipating this coming through, so we can go through and see that financial impact," said Senate Finance Committee Chairman Eric Tarr, R-Putnam.
SB 268 is designed to protect PEIA's solvency. It requires the PEIA Finance Board to have a fiduciary responsibility to protect plan assets for the benefit of plan participants. Beginning July 1, all board members must have complete fiduciary training and complete conflict of interests forms required to serve as a fiduciary.
The PEIA Finance Board is required to base their opinion for health plans on the costs to cover the 80/20 employer-to-employee share. The bill calls for an actuarial study to address the financial solvency of the plan with plan changes to be implemented for the 2023-2024 plan year.
The bill requires PEIA to incrementally increase the employee contribution and employer share to maintain the 80/20 match beginning in the current fiscal year. After year five, PEIA is also required to adjust the premium rate to the Medicare rate to maintain the 80/20 employee contribution/employer share. The bill requires PEIA to charge state employers an administrative fee beginning in July.
SB 268 says a state employer may not cover an employee's spouse, but the employee may add their spouse to their plan by paying the full spousal premium at the actuarial value of the plan.
The bill would require PEIA to reduce the number of salary tiers over the next five years. The PEIA Finance Board would be unable to change the salary tiers during that year. The bill would prohibit PEIA from changing benefits for three years
As of Aug. 1, there are 10 PEIA salary tiers which increased by $2,700 due to Gov. Jim Justice's directive to not increase PEIA state fund premiums and the 5% average pay raise for state employees passed by the Legislature last year.
"The increase to the salary tiers will prevent policyholders from moving into a new tier as a result of the pay raise, which would result in higher premiums for those individuals, as well as higher deductibles and out-of-pocket maximums," according to a May 12 website update from PEIA. "Without this change, more than 15,000 active State Fund employees would have been adversely impacted. Instead, they can now expect a greater take home pay without any additional changes to their benefits."
The state has avoided making any changes to premiums for state employees covered by PEIA, though there is a 9.7% premium increase for non-state employees being considered for fiscal year 2024 beginning in July. According to a PEIA five-year forecast, medical costs are expected to increase by 7% by fiscal year 2027 with prescription drug costs expected to jump by 14%.
PEIA's own forecasts show that by fiscal year 2027, the program will face a $376.5 million hole unless the state puts more money into PEIA or premiums increase. The state put $105 million into a PEIA Rainy Day fund in 2019, and has already taken $31 million to cover a $93 million shortfall at the end of fiscal year 2022 in June. The program will need another $74 million from the reserve fund by the end of this fiscal year, leaving a $40 million shortfall.
"Our anticipated liability going forward right now through 2028 with PEIA and still keeping the reserve fund backing it up nears $1 billion," Tarr said. "It gets into an almost $400 million-per-year base builder. It does that by a gradual change to the 80/20 plan to like an 83/17 and it goes on and on that way."
"That becomes unsustainable," Tarr continued. "There is a fix somewhere in there where you get this so that it stabilizes the growth of that expenses. We know we have that coming at us if we do nothing, so something has to happen in order for us to continue to be able to provide health insurance benefits to our state employees."
Speaking to committee members Thursday, PEIA Acting Director Jason Haught said he is unsure what the fiscal impact of the Senate Health Committee's changes would be to the bill, but he was confident PEIA could carry out the will of the lawmakers.
"There is nothing in here, I believe, that I would consider too big to handle or too much of an issue to deal with," Haught said. "A lot of this stuff is within the purview of the plan and has been done before. It's just putting it code now instead of the policies of the plan."
Gov. Jim Justice has a $85 million supplemental appropriation to put money back into the PEIA reserve fund. The budget bill for fiscal year 2024 beginning in July also includes $59 million for PEIA to cover the cost of increasing reimbursements to in-state health care providers. Wheeling Hospital announced recently it would stop accepting PEIA effective July 1 because in-state reimbursement rates are less than what PEIA pays out-of-state health care providers.
The state Senate also passed a bill on day one of the 2023 legislative session Jan. 11 to require PEIA to reimburse providers at a rate of 110% of similar services offered by Medicare. That bill has not been taken up by the House of Delegates yet, but SB 268 also has a similar provision.
Steven Allen Adams can be reached at sadams@newsandsentinel.com